Published by Atlantic Institute for Market Studies

Menu

EYE ON NEW BRUNSWICK: COSTING ELECTION PROMISES

Earlier this year, New Brunswick’s parliament enacted the Fiscal Transparency and Accountability Act, which, among other things, outlined new rules obliging political parties to “cost” their electoral promises within 90 days of an election. These rules would “increase transparency … provide electors with information on the financial consequences of election commitments … [and] promote an atmosphere in which the public does not expect the fulfillment of election commitments for which the cost has not been disclosed in accordance with this Act.”

From the outset, this legislation appears to be a serious step forward in terms of political accountability on fiscal issues. In practice, however, there are several issues.

1) The results have been lackluster and some of the cost estimates seem purely unrealistic. In the Progressive Conservative platform, for instance, out of eight estimates (i.e. online eLearning, wellness and sport funding, senior’s home first strategy, etc.) five of them are simply four-year totals divided by four years. For those unfamiliar with the budgeting process, cost overruns are regular and assuming funding for “online eLearning” will remain constant at $0.40 (in millions) each and every year between 2015 and 2019 is a bit outrageous. Similarly, the Liberal platform promises a strategic review–akin to federal Finance Minister Paul Martin’s in the 1990s–that would generate $250 million in savings on an annual basis beginning in 2016-17. However, Minister Martin’s ambitions weren’t to identify $250 million in savings annually, but, rather, to produce a “cycle of continuous management improvement.” Importantly, Minister Martin first looked into where the government could achieve savings and then made a commitment to achieve them.

2) By virtue of having greater access to the “books,” the incumbent party has a better grasp of the economic and fiscal challenges facing the province. In other words, the ability to develop an accurate fiscal plan is weakened by the inability to fully understand those challenges. Furthermore, even if it were possible to accurately estimate the cost of certain electoral promises, whether they are achievable is likely unknown until after the election.

3) Although debate about the Act lent an impression that parties would have to commission an accounting firm to approve the cost measures, the legislation reads slightly different: “The Lieutenant-Governor in Council may make regulations requiring a cost estimate to include a statement from an accountant and prescribing the format of, the content of, and the manner of preparing such a statement, including incorporating by reference accounting standards and practices applicable to its preparation and modifying those standards and practices.”

4) Before parliament enacted this legislation, voters were to take electoral promises with a grain of salt; subsequent to it, nothing appears to have changed. This morning, the CBC ran a story discussing how accounting firms in the province are shying away from the process: “Deloitte LLP has reviewed over 50 campaign promises submitted to it by Progressive Conservatives, but declared none ‘credible.'” Deloitte responded to each of the Progressive Conservative’s promises by saying, “We do not express an opinion or any other form of assurance on the cost estimate. Actual results will vary from the information presented and the variations may be material.”

5) In the words of one commenter on the CBC’s website, “Basically, the accounting firms are not going to touch this with a 10 foot pole.” He added, “When the costs of these items goes over budget, as they invariably do, is the accounting firm that provided a positive opinion [liable] for the cost overrun?”

6) Following an election, the option of judicial review becomes available to those parties that lost, allowing them to challenge whether the elected party complied with the legislation. It seems very obvious that opposition parties will exercise this option perennially: the cost to them is zero. Yet, there exists a counterbalance to bad governance: elections. If a party misleads the electorate, they face the possibility of losing in the next election.

There are several other issues and these musings are by no means exhaustive. Perhaps it would be better to enact legislation prohibiting deficit spending altogether–either annually, semiannually, or every four years. By prohibiting debt-financed spending, it eliminates the need for legislation governing campaign promises. Campaigning parties can promise the sun and the moon to voters, however, once elected, they will need to align expenditures with revenues.